SAIL may offer Posco majority stake in JV

Posted on 17 August 2010

Source: The Economic Times, August 12, 2010

Steel Authority of India (SAIL), the nation's second-largest producer, may give Posco a majority stake in their proposed venture, allowing the South Korean steelmaker control of an alternative investment in the country as other plans stall.

The 1.5-million metric tonne plant in Jharkhand may require an investment of around Rs 12,000 crore ($2.6 billion), chairman CS Verma said on Wednesday. The venture will use fallow land at SAIL’s Bokaro factory complex, he said.

“The companies are discussing the nitty-gritty and the final agreement may be signed in October or November,” Mr Verma said. “We are open to all possibilities, including offering a majority stake to Posco.”

Posco, whose proposed plant in the neighbouring state of Orissa has been delayed for more than five years due to farmer opposition, is looking for local partners. Steel demand in India rose 7.6% last year and is forecast to expand 9% this fiscal year, helped by sales of cars and spending on roads and ports. SAIL shares fell 0.9% to Rs 195 on BSE on Wednesday.

Separately, SAIL is in talks with JSW Steel, Rashtriya Ispat Nigam and Jindal Steel & Power to form a venture for acquiring coking coal assets overseas, Press Trust of India reported, citing JSW vice chairman Sajjan Jindal. The venture is looking at assets in Australia, the report said.